Creating a budget in business?

I’ve seen messy finances over and over, and it’s one of the fastest ways to stress yourself out as a small business owner.

And not just with beginners!

Even seasoned business owners who are flying by the seat of their pants financially.

But the good news is that setting up your business finances the right way doesn’t have to be hard.

Creating a business budget helps you manage not only your monthly expenses, but also maintain your financial health long term.

And no, you don’t need to be an accountant to do an actual budget.

I’m Jamie Trull, CPA, and Financial Literacy Coach, and I’m walking you through the five essential steps to getting your small business finances in shape for 2025 and beyond.

If you stick with me until the end, I’ll also share the one step most people skip—and how skipping it keeps business owners stuck.

Step 1: A Business Budget MUST Separate Business Expenses and Personal Finances (Seriously, Don’t Skip This)

Yes, this one seems basic. But SO many business owners skip it when it comes to creating a business budget.

And it causes a world of headaches later.

Why A Business Budget Matters:

If you’re an LLC or Corporation, separating your finances isn’t just smart—it’s required. Commingling funds could invalidate your legal protections.

Even as a sole proprietor, keeping your business and personal money separate will make bookkeeping (and tax season) so much easier.

Pro Tip: Allocate Funds In A Flexible Business Banking Account

Use an actual business banking platform, not a personal account. Banks can—and do—shut down personal accounts used for business.

My personal recommendation? Relay. It’s fee-free and lets you open multiple accounts for different purposes—managing fixed costs, taxes, profit, and operating expenses.

You can even automate transfers using the envelope budgeting system I teach.

🎥 Want to see how I use Relay with my PROFFIT system? 

Step 2: Choose the Right Accounting Software

If you’re making consistent revenue, a spreadsheet isn’t going to cut it much longer. You need real-time visibility into your finances, and for that, you need accounting software.

My Favorite Pick for 2025: Xero

Xero is a cloud-based accounting platform built for small business owners, and I personally switched from QuickBooks to Xero this year.

It’s intuitive, powerful, and integrates seamlessly with Relay.

With Xero, you can:

• Send professional invoices
• Track and categorize fixed and variable expenses
• Reconcile bank transactions
• Monitor real-time cash flow

✨ And here’s a special deal: Get 90% off Xero for SIX months.

🧠 Want a full breakdown of how Xero stacks up? 👈 Check out my review.

Step 3: Pay Yourself (Correctly!)

You didn’t start a business to work for free—so let’s make sure you’re paying yourself the right way.

The Right Method Depends on Your Business Structure:

• Sole Proprietors/LLCs: Pay yourself through owner’s draws
• S Corps/Corporations: You MUST pay yourself a reasonable salary

Getting this right matters. If you’re an S Corp and pay yourself too little (or nothing), you could get in hot water with the IRS.

🎥 Watch this tutorial on how to pay yourself properly: How much should I pay myself from my business?

🎥 Need help figuring out your “reasonable salary” as an S Corp owner? Learn how to determine reasonable compensation for S Corp

Step 4: Set Aside Money for Taxes (Now, Not Later)

Want to avoid a surprise five-figure tax bill? Start setting aside taxes every time money hits your account.

Use Relay to Automate Tax Savings:

Relay allows you to:

• Create a dedicated taxes account
• Set automation rules to transfer a percentage of income into that account
• Get $50 for opening a free account with Relay, the preferred Profit First banking system when you use my link and fund your account!: https://JamieTrull.com/Relay 

This takes the pressure off—and helps ensure the money’s there when you need it.

🎥 Watch this video to Learn how to automate your tax savings using Relay

Step 5: Make Monthly Money Dates a Habit To Maximize Cash Flow

This is the most skipped step—but it’s the one that can transform your business.

Once a Month, Spend 30 Minutes to:

• Review your income and expenses
• Analyze profit margins
• Compare actual results vs. goals
• Make debt payments and informed decisions

Xero’s dashboard gives you real-time visuals that make this easy to do—even if you’re not a numbers person.

🎥 Want to see my exact Money Monday routine? Watch this video

🕯 Bonus Tip: Light a candle, grab your coffee, and make it a CEO date you actually look forward to.

The Secret to Long-Term Financial Budget Success? Automation.

Finance systems are only effective if they work without you needing to micromanage them.

By combining Relay’s automation and Xero’s integration and reporting, you create a system that works while you sleep.

Together, these tools will:

• Keep your finances organized
• Ensure your taxes are funded
• Help you pay yourself confidently
• Provide real-time insights for better decisions

👉 Set up your financial systems the right way—start your 90% off Xero subscription today

Final Thoughts For The Best Budgeting Process

Financial chaos doesn’t have to be your reality. With the right setup, systems, and a few smart habits, you can run your business with confidence.

Whether you’re just starting out or finally ready to take control, now’s the perfect time to:

• Open a dedicated business bank account
• Choose accounting software that gives you real data
• Pay yourself what you’re worth
• Plan ahead for taxes
• And show up for your finances with consistency

🎥 Don’t forget to subscribe to my YouTube Channel for more tutorials, reviews, and real talk about small business money!

✨ Claim your Xero discount here — your future CEO self will thank you.

This post may contain affiliate links, which means I may earn a small commission if you make a purchase through these links at no additional cost to you (in fact, using our links can typically SAVE you money). We appreciate you supporting our small business by using our links!

Video Transcript

Please note that the following is a direct transcript and has not been edited for errors or omissions. It is a verbatim representation of the spoken words and may include colloquial language, grammatical errors, or other inconsistencies. We have chosen to provide the transcript in its raw form to preserve the authenticity of the conversation. We recommend cross-referencing with the original audio or video source for complete accuracy.

Okay, real talk. One of the fastest ways to stress yourself out as a business owner is having messy finances. And trust me, it happens to so many people at the beginning and honestly people who aren’t even at the beginning as well.

But here’s the good news. Getting your business finances set up the right way doesn’t have to be exhausting and you don’t even need an accountant to help you do it.

In this video, I’m gonna be breaking down the five things you need to get your financial systems working for you and not against you.

Hi everyone. I’m Jamie Trull, CPA and financial literacy coach, and here on this channel I’m giving you all the tools you need to stay informed, organized, and profitable in your business finances. So if you like all of those things, make sure to like and subscribe.

The truth is, if your financial systems are weak, growth becomes chaos. But with the right tools and habits in place, you will feel much more calm and in control and ready to go come tax time.

Now, make sure to stick with me until the end, because the last one I’m gonna talk about is the one that most business owners skip, and that is one of the reasons that they can stay stuck.

Step 1: Separate Business and Personal Finances

Let’s jump into your first must-do, and that one is: you must separate business and personal money.

Now, I know that sounds super, super basic, but I’m gonna tell you that even experienced and seasoned business owners run into this.

I’m talking separate it all as much as you can. That means getting a business bank account set up. Do not pass go. Do not collect $200 until you have done this. Literally, don’t collect any money until you’ve set up that business bank account.

Especially if you are an LLC or a corporation, this is absolutely critical because by not separating business and personal sufficiently, you actually can invalidate your legal protection. So if you were ever sued, they could potentially even come after your personal assets if you aren’t keeping things separate and treating your business like a separate business.

Now, we’re not talking about the occasional one-off—oops, I spent this on my business card, or oops, I paid for this with my personal card—but in general, we’re talking about the habit of keeping things separated and being able to demonstrate, if you ever needed to, that you truly were treating your business like a business and not an extension of you.

Even as a sole proprietor—even if you are not any kind of entity—this is still critically important and you are going to thank yourself for it come tax time.

One of the hardest things to do is to go through a co-mingled bank account and try to figure out what your deductions are if everything is running through one place to begin with. Life is so much easier—and your tax accountant will thank you too.

Now, another question I get is: should this be a business bank account?

Does it need to be? Or can it be a personal type account that’s just separate from my other personal account?

And the answer is: it needs to be a business-type account. In fact, because of banking laws, they can shut you down if they believe that you’re using a personal-type account to transact business. And you don’t want to get into that situation.

When you’re looking for a business banking platform, make sure that you are looking for one that has no hidden fees and has the features that you need.

Personally, I use Relay, and it has been fantastic—and there are no hidden fees.

Not only that, it allows me to open multiple accounts seamlessly and easily that I can use for things like reinvesting back into my business, saving for a rainy day, or saving for taxes, which we’re gonna talk about in a bit here.

Step 2: Choose the Right Accounting Software

The second critical thing that you need to do when you set up your small business is choose the right accounting software.

Now, when you are just getting started—when you haven’t brought in money yet, you’re not really having expenses yet—you might not need this.

Perhaps it’s working for you to track things on a P&L spreadsheet or something like that. That is totally fine for a period of time, but it probably won’t be long into your business journey where it’s gonna make sense to move into an accounting software.

So once you’re consistently making money in your business, that’s a good time to really be looking at what an accounting software can help you do.

You do not want to wait until tax time to realize that your spreadsheet is no longer cutting it.

Accounting softwares have come a long way from where they were, say, 15 years ago. Especially these cloud-based accounting softwares—they do a heck of a lot more than just accounting.

We might think of accounting as running a profit and loss or a balance sheet, tracking our deductions for taxes. And yes, they do all of those things, but most of the big ones on the market are gonna do additional things as well.

One of the things I’ve been doing recently—if you’ve been following my content—is I actually switched this year from QuickBooks Online, which I’ve used for years, to try out Xero.

Xero is a cloud-based accounting solution that was really built with small business owners in mind, which is something I really like about it.

So with Xero, not only are you gonna be able to do your normal accounting functions, like tracking your expenses and running reports, but you’re also gonna be able to do things like send invoices, reconcile bank accounts, and get a real-time look at your cash flow.

And the great thing is now in 2025, these accounting softwares have lots of integrations as well.

For example, Xero integrates really well with Relay, which I was just talking about before. So that means you can sync your banking and your accounting with zero stress.

I’ve been using Xero for over an entire quarter of the year so far, and I did a full review video recently talking all about my experience. So if you’re interested in checking it out and maybe seeing an alternative to QuickBooks Online as an accounting software, go check that video out next.

I should probably mention that if you do sign up for Xero, I am now a partner with them because I have really enjoyed my experience and I have negotiated a special deal that you cannot miss.

Right now, for the time being, it is 90% off for six months. That’s subject to change at any point in time.

However, that is a great deal—90% off for half of a year. You don’t want to miss that. It gives you plenty of time to try it out and decide if it’s a good fit for you and your business.

So if you want to learn more, go to jamietrull.com/xero or use the QR code that is currently on the screen to go check it out.

Step 3: Pay Yourself Correctly

Number three to do, which is pay yourself correctly.

Now, you didn’t start your business to work for free, did you? You probably wouldn’t work for somebody else for free, so why would you work for yourself for free?

Yes, I know in the very beginning you may not have the cash flow yet to pay yourself, but again, once you’re making consistent sales, the goal is to start paying yourself—even if it isn’t a ton—just to get into the habit of it.

Now, the type of entity that you are is gonna dictate how you pay yourself and what the requirements are.

So if you’re starting out as a sole proprietor—meaning you’re not setting up an entity just yet—or you are an LLC who has not made any kind of S corp election, then you’re gonna pay yourself just owner’s draws, which just means basically transferring money from your business bank account to your personal bank account. That’s an owner draw.

Now, if you are a corporation or maybe you’re an LLC who is elected to be taxed as an S corp, then you’re gonna have different rules, and there are requirements for you to pay yourself a reasonable salary.

If you want to learn more about how to pay yourself correctly, go check out this video next.

Step 4: Set Aside Money for Taxes

The fourth thing that you need to do to set up your small business finances correctly is to make sure you’re setting aside money for taxes. And ideally you wanna do that before it’s too late.

Nobody wants that big surprise tax bill in April.

This is one of the biggest mistakes that I see new business owners make, and that is because it is hard to shift from a W-2 mentality—when you were working for someone else and they were automatically withholding taxes from your paycheck—to being a business owner or a freelancer.

In that case, you’re responsible for your own taxes. You need to be paying in, and in fact, you likely need to be paying estimated taxes.

The first year of business it may not be the biggest deal, but again, you still want to be saving for those taxes so that you have the money. But then in the future, you’re probably gonna want to start paying estimated taxes throughout the year so that you don’t run into fines and penalties that you didn’t anticipate.

I highly recommend setting aside money for taxes. You can work with an accountant to figure out how much you should set aside.

As your income grows and as your profit grows in your business, the more you’re going to want to set aside as a percentage.

You probably want to set that aside in a separate account.

If you want to set up separate banking accounts within one platform, a great business banking platform is Relay, that I talked about earlier. It’s super easy—with the click of a button—to create a separate account and silo that money so that you don’t accidentally spend it when you need it for taxes.

With Relay, you can even set up automation rules that do this automatically. That’s the secret to being prepared and sleeping well at night.

Step 5: Make Monthly Money Dates a Habit

Here is the fifth and final thing that you need to do to set up your small business finances correctly.

And like I said, this is the one a lot of people skip. You may have all the other ones, but are you truly doing this?

Because the things we’ve talked about so far are really more compliance things that you have to do. However, there are also things that you should be doing because you’re the CFO of your own business.

If you haven’t hired someone to run the finances, you are the Chief Financial Officer. You are the one making those decisions.

So what exactly does that mean?

Well, the fifth thing that you need to do is to get in the habit of monthly money dates—and this is the one that makes the biggest difference on your bottom line at the end of the day.

Closing Routine: The Power of Financial Awareness

Start easy. Each month, sit down at the beginning of the next month and take 30 minutes on your calendar just to be looking at your finances.

That means going into your accounting software and pulling those reports—your profit and loss, your balance sheet—and taking a look at them.

Look at your profit margins—how are they doing? How much money are you making once you subtract those expenses that you had paid for?

Then I want you to compare how much you actually made that month with how much your goals or your budget was for that month. How far off are you?

If you don’t have goals, then start there. We should start setting goals even early on in our business because it helps to keep us accountable to what we really want to achieve.

And I want you to make decisions based on real actual data. That is where the game changes when it comes to business ownership.

Finances is not all about taxes. I know that’s maybe what we think of when we’re first starting a business—we equate the two together—but that’s not really what it is.

We’re talking about making money so that you can actually pay yourself for the work that you’re doing in your business. That is the goal here.

We want to be profitable, we want to be successful. We want to have a sustainable business that can grow and we want to maybe be able to even hire people, right?

All of that takes real financial awareness and sitting down and being really intentional about looking at your numbers—even if you don’t know what they mean just yet.

Again, subscribe if you want to get more information on how to understand your numbers and what they mean. That’s what I love to talk about here.

Now you might be wondering: how do I even get access to all of this data? How do I find it?

That’s where an accounting software like Xero can really help.

Like I said, I’ve been using Xero and I love a lot of the functionality, including all the different reporting you can get out of it. It’s going to help give you charts and graphs that give you a clear visual of what’s going on in your business right now.

You’re going to be able to see things like outstanding invoices, cash flows, ins and outs. You’re going to be able to monitor your profit and your profit margins through the Xero platform.

In my world, knowledge is absolutely power. Once you have that knowledge and that data, you can make better decisions with it.

But if you’re not looking at the data, then you’re not going to be able to see opportunities that might be in front of you to grow your bottom line.

Final Thoughts on Business Budgeting

The other great thing about accounting software is that it’s real time. It can be pulling in all of your information from different sources—your banking information, things like that—and it’s going to provide a real-time view of what your business looks like right now.

If you’re a person that’s only looking at your finances once a year, come tax time, again—you’re losing so much valuable time and data that you could be using that whole time to make better decisions.

You can start with doing this monthly. I actually spend about an hour on my finances every single week, I call it Money Mondays.

I walk in and I have specific tasks that I do, but I also spend time just looking at my financial reports and trying to interpret what they are telling me.

And let me tell you, the more you do this, the better you will be at it.

If you want to see what my whole Money Monday routine looks like and what I’m doing, watch this video where I chronicle one morning—including doing things like lighting my candle to get me in the mood and getting my coffee for the morning, which is a must.

So if you’re ready to get your finances set up the right way, and you think it’s time to be checking out an accounting software, I have a special deal with Xero where you get 90% off for six months.

Like I said, it is a great partner deal, so you definitely want to take advantage of that at jamietrull.com/xero or with the QR code that is currently on the screen.

Let me know in the comments—where are you in the process of getting your business finances sorted? Are you in the beginning? Are you halfway there? How are you feeling?

Tell me below.

And of course, don’t forget to like and subscribe. It’s like giving me a big, giant hug virtually, and I hope that I see you next time.

Bye for now.